William Hill is one of the world’s leading sports betting and gaming companies.
Our 86 years of heritage and strong brand, combined with our growing digital expertise and global presence, create a solid platform from which to grow. With these foundations in place, our strategy will build a sustainable business that puts player safety at the heart of our culture.
We are excited by the opportunities and recognise the challenges that lie ahead, as we work with our customers, our teams and our partners to provide a great betting and gaming experience.
An investment in William Hill delivers cash-generative growth opportunities, underpinned by an embedded focus on safer gambling. This has enabled us to sustain the dividend while continuing to grow the business.
The global gambling industry is worth cUS$300bn1; only 12% happens online and the growth is outpacing the retail market. This is a significant opportunity. Through continuous investment in our modular digital platform the competitiveness of our offering will ensure we participate in the growth of digital gaming and sports betting.
We are diversifying our global reach through organic and inorganic growth. We anticipate the US, where we have access to 24 states2, will be the largest sports betting market in the world. Following the overturn of PASPA, estimates forecast the market will grow rapidly to be worth between US$5bn and US$19bn3 by 2023. We will continue to expand our Online offering into high-growth global geographies beyond the UK.
Our investment case is underpinned by our commitment to safer gambling. Our aspiration that nobody is harmed by gambling guides our decision-making and sustains a culture of customer protection. In the UK we are actively involved in the Betting and Gaming Council and are working with others to lead the development of the Safer Gambling Commitments.
Betting and gaming are intrinsically cash-generative activities. William Hill delivers strong operating cash flow. When combined with our disciplined approach to investment, we have maintained a healthy balance sheet and a long-term track record of dividend payment while continuing to grow the business.
1. H2GC; Global gambling gross win data, October 2019
2. 24 states is contingent on the completion of the acquisition of Caesars by Eldorado. Excluding Caesars, William Hill US has access to 18 states. When referring to states this includes Washington D.C.
3. Broker research, CIA country profiles, U.S. Census Bureau, H2GC
We have been listed on the London Stock Exchange (WMH.L) since 2002 and employ over 15,500 people in 12 territories: the UK, Gibraltar, Bulgaria, Spain, Italy, Poland, the Philippines, Malta, Latvia, Denmark, Sweden and the US.
Our business is comprised of three businesses: Retail, which operates land-based licensed betting offices in the UK; Online, which provides mobile and online betting and gaming services to customers in the UK, Europe and many other countries across to the world; and William Hill US, which operates mobile betting and land-based sports books in a number of US states, and provides risk management services to US sports lottery providers.
William Hill’s strategy is focused around three priorities:
- Driving digital growth in the UK and internationally;
- Growing a business of scale in the US; and
- Remodelling UK Retail.
This is underpinned by our approach to sustainability, framed around our ambition that nobody is harmed by gambling.
We have outlined ambitious growth targets that take account of both the near-term challenges and longer-term opportunities ahead for each of our three divisions. We will meaningfully reshape William Hill over the coming years, moving from a business that is predominantly UK-centric and land-based to being a leading gambling business that is digitally led, internationally diverse and sustainable.
Driving digital growth in the UK and internationally
Our ambition for Online is to build the world’s most trusted digital gambling brand and a business with greater scale, more geographic diversity and higher profit margins. The UK is our largest market and we will deliver an engaging and safe customer experience which will enable us to grow sustainably ahead of market growth rates and gain market share. We will also look to accelerate Online’s revenues by diversifying into faster growing international markets beyond the UK and the US.
Overall, our target is to grow digital revenues to reach c£1bn (in constant currency) by 2023, representing a CAGR of c10%, and by increasing operational efficiency to double profits by 2023, representing a CAGR of c13%.
Growing a business of scale in the US
In May 2018, the Supreme Court of the US overturned the Professional and Amateur Sports Protection Act 1992, which had banned states from regulating sports betting. With this prohibition removed, the market is opening up across many states.
Market estimates suggest that the US could generate between $5bn and $19bn of sports betting revenues by 2023, depending on the speed and nature of state-by-state regulation. This is a major new market opportunity and one that we believe we are very well placed to pursue as we are the US’s leading sports betting company.
William Hill US already benefits from being supported by a successful and profitable Nevada operation. With these foundations already in place, our goal is to be the market leader and we intend to enter every state that regulates sports betting with mobile and/or land-based operations depending upon each state’s regulations. Our strategy is focused on market access, brand and operational excellence. Where regulations and partnerships allow, we will lead with the William Hill brand, and will use ‘powered by William Hill’ as a secondary brand approach.
Our ambition is to grow William Hill US’s EBITDA from c$50m from the US Existing business in 2018 to c$300m from the US Existing and US Expansion business in 2023. We expect our operations in new retail and tethered mobile states to become profitable within their first one to two years, supporting investment in brand, marketing and technology. Open mobile markets, which require greater investment in building our brand profile, will achieve profitability over a longer timeframe.
We are investing c$70m in a new proprietary William Hill US technology platform using proven components from inside the Group and from NeoGames. This modern, modular platform is designed to meet the flexibility needed for this market and to give us the best technology in the market during H1 2019.
Our Retail business is focused on addressing the challenges laid down by the Triennial Review decision, which will drive substantial structural change across the licensed betting office sector over the coming years. This will include product innovation to offer alternatives to B2 gaming, as well as remodelling the estate and the business. The implementation date has been announced as October 2019. As previously announced, we expect this change to reduce Retail’s profitability by £70-100m following mitigation measures, including c£15m of cost reductions. Based on the October implementation date, Retail’s Q4 2019 profits are likely to reduce by c£40m as mitigating actions will primarily be seen from 2020 onwards. Exceptional costs of remodelling Retail are expected to be c£40-60m.
Regulation and our marketplace
Gambling takes many forms and varies from country to country. The industry is made up of government-run operations, licensed monopolies or open commercial markets. In some countries, there is an outright ban on gambling.
The wide range of products available to consumers – including lotteries, sports betting, casino games, bingo and poker – are available in many different formats, from land-based clubs, pubs, casinos, betting shops and race tracks to online gambling. Land-based activities remain the format of choice for most gambling customers across all the leading countries by gambling revenues. Online gambling first started in earnest in 1998 while mobile gambling has become more prominent in the last five years with the advent of smartphone and tablet technology.
In many countries, gambling regulations were originally designed with land-based operations in mind. With the advent of digital gambling overcoming physical borders, governments are moving to update their regulations to take account of online and mobile gambling.
This is creating opportunities for companies – such as William Hill – who have built a successful digital business. It is particularly an advantage for those who have become successful in the UK market as the competitive intensity in this liberalised market has driven high levels of innovation that are proving attractive in other markets.
Public trust in gambling has meaningfully declined over the last five years. There are many concerns people raise, from TV advertising to exposing under 18s to gambling too early.
For many, the biggest concern is what companies like William Hill are doing to help those customers who are experiencing harm as a result of their gambling.
Around 430,000 people in the UK are classified as problem gamblers. Research from GambleAware estimates that two million people are at risk. And when gambling goes wrong, it doesn’t just damage one person – it also impacts their families, friends and communities.
Our ambition is that nobody is harmed by gambling. We’re focusing on four areas to deliver this:
- Support all customers to stay in control through how we design and market our products;
- Create new ways to identify people at risk and intervene effectively;
- Strengthen the system of support for those who do experience harm; and
- Empower our colleagues with the understanding and skills to make a difference.
For more about our approach to responsible gambling and sustainability, visit our Responsibility section. And read about our ambition that nobody is harmed by gambling.